Video streaming website Twitch has been bought by Amazon for almost $1bn. Photograph: Rex Features

Tom Cassell may have spent an unexceptional nine hours on Sunday before he finished killing zombies in the Call of Duty video game. But the fact that 120,000 people were watching him unleash pixelated mayhem is why the internet retail giant Amazon thought it was worth paying almost $1bn (£603m) for the website that hosted the broadcast.

The British 21-year-old happens to be the most watched player on Twitch, a YouTube-like website where more than a million people turn on to watch him every month, particularly for his videos of the Lego-style building game Minecraft. But rather than fall into the hands of YouTube's owner, Google, Twitch has ended up in the hands of what is becoming one of its competitors.

Twitch allows gamers worldwide to film themselves playing video games and stream the resulting shows live to the site's total user base of 50 million people monthly. The site has become a key part of the competitive gaming circuit, letting audiences watch professional gamers go head to head.

It is also the adopted home of speedrunners, who aim to break world records for the time taken to finish a game; and it has attracted more oddball broadcasts, such as when 15,000 people gathered online to watch an actual fish called Grayson use a specially designed interface as it swam to control a character in a Pokemon game.

Jeff Bezos, Amazon founder and chief executive – who recently bought the Washington Post with his personal wealth – justified his company's move with a reference to Twitch's audience. "Broadcasting and watching gameplay is a global phenomenon and Twitch has built a platform that brings together tens of millions of people who watch billions of minutes of games each month," he said, before adding: "And, amazingly, Twitch is only three years old."

Twitch began life as a spinoff of the so-called lifecasting site Justin.tv, founded by the entrepreneur Justin Kan in 2007 to broadcast his entire life online, 24 hours a day, seven days a week. Interest in Kan's existence was limited but the tools he and co-founders Emmett Shear, Michael Seibel and Kyle Vogt had built were eventually used to establish Twitch, in 2011.

Today more than half of Twitch's users spend at least 20 hours a week on the site, and in 2013 they watched a total of 200m hours of content every month. Twitch is now the fourth-biggest user of internet capacity in the US, behind Netflix, Apple and Google.

As Twitch has grown, the company has begun to take itself more seriously. For instance, it has started to clamp down on copyright infringements, muting videos for up to half an hour if it detects copyright music being played.

The inevitable corporate evolution, though, has left some Twitch users concerned that the transition from bedroom to television will have unhappy consequences.

Mat Jones, one Twitch broadcaster, said: "As somebody who likes to play music in the background, that's going to prevent that from now on. I'm not going to be able to stream and tell people what I'm listening to right now. But I'm also concerned that Twitch itself isn't going to be able to tell whether something they find in the game is actually breaking copyright rules."

"If a copyrighted song is played in-game, am I going to lose 30 minutes of audio because of that?

"This happened to people who were playing Pokemon, who then, because it had music from Pokemon in it, were hit with the copyright notice."

As for Amazon, it has begun to compete more aggressively with Google. It is going head to head with the search-engine giant with an online advertising product. Traffic heavy Twitch would be another place where the mooted keyword advertising system could be deployed. Monopoly concerns are thought to have been behind Google's decision not to bid for Twitch.

Amazon, originally an online bookstore, has been investing in a range of media industries. It bought the film distribution website LoveFilm and has founded its own computer game division, making titles for its Fire tablets. Since the beginning of 2014, the company has ramped up investment in the division, going on a hiring spree to bulk out the office – including hiring former Bioshock designer Ian Vogel to head the studio.

Brian Blau, of the industry analysts Gartner, said he believed Amazon was just getting started: "Empire building takes time and resources and it appears that, with the Twitch acquisition, Amazon is ready for that challenge."

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